Adobe Reports Falling Consumer Goods Prices for Six Consecutive Months
August 11 2016 - 9:00AM
Business Wire
July Report Shows Record Number of Groceries Purchased
Online; Sales of Pokémon Items Jumped While Prices Fell; Brexit
Continues to Impact London Travel Prices
Adobe (Nasdaq:ADBE) today announced the release of its monthly
Digital Price Index (DPI) for July, which identifies new trends in
online grocery shopping and the continued impact of Brexit on
London flight and hotel prices. Online grocery shopping and
in-store pickup were at a record high, while sales of Pokémon
branded items grew significantly as well. Prices across nearly all
other categories the DPI tracks continued to decline. Leveraging
big data, the DPI looks at inflation rates by analyzing actual
transactions in real-time to account for changes in consumer
behaviors, filling a void in traditional, survey-based economic
reporting.
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For July, the DPI reports substantial growth in online grocery
sales with 66 percent Year-over-Year (YoY). The share of groceries
purchased online and picked up in-store rose from 18 percent in
January 2015 to a record 45 percent in July 2016, whereas 55
percent accounted for in-home deliveries. The rise in online
grocery shopping reflects people’s desire for convenience and time
savings while delivery cost and availability beyond metropolitan
areas contributed to the increase of in-store pickups. Online
grocery shopping grew beyond major tech centers, with Oregon,
Kentucky, Washington, Colorado and Indiana seeing the highest
increase with up to 350 percent YoY. While prices for a majority of
online groceries continued to fall (0.8 percent YoY), prices for
fruits and vegetables increased – with prices for organic produce
surging at twice the rate of non-organic.
In the toys and electronics categories DPI data shows continued
price deflation. Sales for Pokémon items, for example, fell 2.9
percent Month-over-Month (MoM) despite sales volume for Pokémon
items increasing up to 170 percent YoY. Pokémon toys and
electronics saw even more deflation than the overall categories
(1.2 percent for toys and 1 percent for electronics). Additionally,
Brexit continued to impact London travel prices. London airfares
declined significantly at 13.3 percent since the Brexit referendum
and are down 12.3 percent YoY. Hotel prices in London dropped 15.2
percent YoY.
“The Federal Reserve is looking for an uptick in inflation, yet
we’re seeing further deflation, even for categories with
significant increase in demand such as groceries and popular
merchandise like Pokémon items,” said Mickey Mericle, vice
president, Marketing and Customer Insights at Adobe.
“The lack of inflation in Pokémon-branded items reflected in the
DPI, despite their explosion in popularity, is fascinating. Among
other factors, it could be that the new buyers are more price
sensitive, which hints at some of the difficulties the economy is
facing in raising prices, or that they have been able to ramp up
production without increasing per unit costs,” said Pete Klenow,
professor, Department of Economics at Stanford University.
“If you look at the growth rate of the US economy, it's only
moderate – there are a lot of international risks and there is no
sign of inflation,” said Austan Goolsbee, professor of economics,
The University of Chicago's Booth School of Business and former
chairman of the Council of Economic Advisers for President Obama.
“While our long-run prospects are excellent, the next 12-18 months
are likely to continue to have some significant bumps.”
Methodology
By tracking seven dollars and fifty cents out of every ten
dollars spent online with the top 500 U.S. retailers,** the DPI is
able to analyze billions of digital transactions. Adobe is the
first company to conduct a digital-centric analysis based on
real-time access to data tracking the price-paid and the quantity
of each item sold. Unlike other models, Adobe Digital Insights
leverages the Fisher Ideal Price method, which uses actual
quantities purchased to measure inflation and is recognized by
leading economists as the gold standard for the calculation of
inflation. In contrast, the Bureau of Labor Statistics’ Consumer
Price Index (CPI) relies on consumer surveys to approximate sales
in each product category and tracks only 87,000 products. To
produce the July DPI, Adobe analyzed 15 billion website visits and
online transactions for over 2.2 million different products.
DPI Categories
Essential goods including groceries and non-prescription drugs
continue to see less deflation than non-essential goods such as
toys and electronics. Latest findings include:
- Groceries: The DPI reports that
prices dropped 0.2 percent MoM in July for online groceries. In
June, the DPI saw prices decrease 0.1 percent YoY. The CPI saw 1.3
percent deflation during the same period. The DPI covers 30 to 40
percent of online grocery transactions for approximately 195,000
products, and is heavily comprised of groceries purchased online
and picked up in-store.
- Toys: For July, the DPI shows
deflation of 1.2 percent MoM for toys. In June 2016, the DPI
reported prices dropped 4.9 percent YoY, whereas the CPI showed 8.5
percent deflation. Data contains transactions for approximately
249,000 products.
- Nonprescription Drugs:
Non-prescription drugs prices rose 0.3 percent MoM in July. In June
2016, the DPI saw prices increase 0.3 percent YoY, whereas the CPI
reported prices dropped 0.4 percent during the same time period.
DPI nonprescription drug data is based on transactions of 16,000
products.
- Electronics: In July, prices for
electronics continued to decrease, with the DPI reporting 0.9
percent deflation MoM. The CPI doesn’t break out electronics
overall, but reported that prices fell 19.4 percent for TVs and 7.6
percent YoY for computers in June. For the same period, the DPI saw
slightly less deflation for TVs, down 17.5 percent, and
significantly more deflation for computers, reporting that prices
dropped 12.3 percent. DPI data is based on online transactions of
one million electronics products.
- Flights: Domestic airfares
decreased 4.8 percent MoM in July and 7.5 percent YoY. All domestic
flights saw price decreases in July except Florida. Prices for
international airfares dropped 0.2 percent MoM. Data is based on
approximately 370,000 flight routes.
- Hotels: In July, domestic hotel
prices saw 2.3 percent inflation MoM. Hotels in Nevada saw the
largest price increase. In June, the DPI saw a 0.8 percent increase
in domestic hotel prices, whereas the CPI reported 6.0 percent
inflation YoY. Data is based on approximately 250,000 hotel
properties and includes associated fees.
The Adobe Digital Economy Project July report can be found here.
Adobe, Austan Goolsbee and Pete Klenow will host a TweetChat about
the state of the U.S. economy on August 15 at 2 p.m. Eastern
Standard Time. Join the discussion on Twitter at #AdobeChat.
About Adobe
Adobe is changing the world through digital experiences. For
more information, visit www.adobe.com.
*Source: Center for Disease Control and Prevention’s Obesity
Prevalence Maps
**Source: Internet Retailer’s 2015 Top 500 eGuide
© 2016 Adobe. All rights reserved. Adobe and the Adobe logo are
either registered trademarks or trademarks of Adobe Systems
Incorporated in the United States and/or other countries. All other
trademarks are the property of their respective owners.
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AdobeMelissa Chanslor, 415-832-5489chanslor.@adobe.comorStefan
Offermann, 408-536-4023sofferma@adobe.com
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